BNUMBER:  B-256576
DATE:  January 17, 1996
TITLE:  Tita D. Corpuz and John R. Fears

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Matter of:Tita D. Corpuz and John R. Fears

File:     B-256576

Date:   January 17, 1996

DIGEST

1.  Agency's determination that various charges incident to occupancy 
of temporary quarters are allowable is not arbitrary, capricious, or 
contrary to law.  Hence two transferred employees who occupied 
temporary quarters in rented apartments may be reimbursed subsistence 
expenses incurred in renting temporary quarters, including rent, 
apartment application or administrative fees, the cost of transporting 
rental furniture into the temporary quarters, a final cleaning fee, a 
security alarm fee, and a police alarm permit.  However, a telephone 
installation fee may not be reimbursed as a subsistence expense.

2.  A transferred employee who entered into a 6-month apartment lease 
for temporary quarters occupancy had to pay a lease-breaking fee when 
he vacated the apartment after approximately 4 months.  His 
lease-breaking fee may be reimbursed if the agency finds that it meets 
the standards applicable to other lodging expenses incurred by 
employees authorized to occupy temporary quarters.  Patsy S. Ricard, 
67 Comp. Gen. 285, 290 (1988); David E. Nowak, 65 Comp. Gen. 805 
(1986); Alex Kale, 55 Comp. Gen. 779, 782-83 (1976); and Walter V. 
Smith, B-186435, Feb. 23, 1979, are overruled to the extent they are 
inconsistent with this decision.

DECISION

The Department of Veterans Affairs (VA) requests a decision concerning 
the entitlement of two employees to be reimbursed for certain lodging 
expenses each incurred while in temporary quarters.[1]  As discussed 
below, some of the expenses claimed by each may be reimbursed.

Mrs. Tita D. Corpuz and Mr. John R. Fears are employees of the VA who 
were transferred to the VA Medical Center in Phoenix, Arizona, in 
March and May 1993, respectively.  Each was authorized subsistence 
expenses while occupying temporary quarters and each received 
extensions not to exceed 120 days.  Also, each occupied a rented 
apartment with dependents as temporary quarters at the new station.  
The VA Medical Center disallowed certain lodging expenses claimed by 
each employee.

The items disallowed in Mrs. Corpuz's case were the costs of a 
telephone installation fee ($46.50), a security alarm fee ($37.95), a 
police alarm permit ($10.00), and an apartment application fee 
($25.00).  The expense items disallowed in Mr. Fears's case were a 
lease-breaking fee ($111.20), an apartment administrative fee 
($115.00), a final cleaning charge ($30.00), and a delivery charge for 
rented furniture ($35.00).

VA Medical Center has submitted appeals on behalf of these two 
employees, and contends that the items should be reimbursed.  Its 
concern is that all reasonable charges incident to rental lodging be 
allowable, so that if rental lodging is less expensive than a hotel or 
motel, it will be in the interest of both the employee and the 
government for the employee to use the lower cost lodging.

OPINION

The regulations governing payment of temporary quarters subsistence 
expenses (TQSE) are contained in chapter 302, Part 5 of the Federal 
Travel Regulation (FTR).[2]  Section 302-5.4(a) of these regulations 
provides for reimbursement of actual subsistence expenses incurred 
that are incident to the occupancy of temporary quarters and are 
reasonable in amount.  Among the expenses allowed are lodging expenses 
and "fees . . . incident to . . . lodging."  In addition, FTR  
302-2.1 provides that, except as specifically provided in Chapter 302, 
per diem transportation costs, and other travel expenses of a 
transferred employee shall be allowed in accordance with 5 U.S.C.  
5701-5709 and Chapter 301 of the FTR (which deals with the allowable 
travel expenses of employees on temporary duty).

Generally, the costs of services that are allowable when an employee 
occupies temporary quarters are those ordinarily included in the price 
of a hotel or motel room, that being the usual form of temporary 
lodging.[3]  These would include costs incident to rental and may 
include fees for cleaning and telephone services, trash removal, and a 
cable television rental fee.[4]  As this case illustrates, however, 
there are expenses associated with the rental of residences that 
ordinarily are not reflected in a hotel or motel bill.  The 
"hotel/motel" standard, therefore, should not be applied as a rigid 
rule in determining what costs are incident to apartment rentals, but 
only as a guide to what is reasonable under the given circumstances.  
For example, the FTR includes among the expenses that may be allowed 
when an employee rents an apartment while on a temporary duty (TDY) 
assignment (and thus may be allowed as TQSE when an employee obtains 
temporary quarters in a rented apartment pursuant to a transfer) the 
rental cost of appropriate and necessary furniture and appliances; the 
cost of connection, use and disconnection of utilities; cost of 
reasonable maid fee and cleaning charges; and a monthly telephone fee.  
FTR  301-7.14(a)(1).[5]  While many of these would be included in the 
price of a hotel room, i.e., they are necessary costs of providing 
hotel services, there is ordinarily no connecting or disconnecting of 
utilities associated with a hotel stay.

We have in the past expressed a view about whether various charges 
incident to occupancy of temporary quarters may be reimbursed 
independent of the agency's own conclusion.  However, we believe that 
a sounder decision-making process is for the initial determination of 
allowability to be made by the agency concerned, considering whether 
the type and amount of expenses claimed are usual for the geographic 
area.  We will not disagree with such a determination unless it is 
arbitrary, capricious, or contrary to law.  In this case, the VA 
argues that the claimed items "clearly meet the criteria of being 
reasonable and being incident to lodging."  Except for the cost of 
telephone installation, we do not believe that the VA's conclusion is 
arbitrary or contrary to law.

We would not object if the agency allowed the fee charged Mrs. Corpuz 
for processing her apartment rental application and the substantially 
similar fee charged Mr. Fears.  While such charges would not have been 
incurred if these employees had rented hotel rooms, the record 
indicates that such fees are commonly assessed in many areas, 
including the Phoenix, Arizona, area, regardless of the period of 
anticipated occupancy of those quarters.  As such we believe they 
qualify as expenses incurred incident to the occupancy of temporary 
quarters.

Mr. Fears's claim for final cleaning is an expense incurred by the 
apartment management to prepare the apartment for the next occupant.  
Such cleaning is comparable to services provided by hotels and motels 
and ordinarily reflected in their room charges.[6]  That charge may be 
included as part of his cost of lodging.  Mr. Fears may also be 
allowed the cost of transporting rental furniture to his temporary 
quarters, even though this is not a cost typically reflected in hotel 
or motel charges.  The cost of delivery is usually included as a part 
of the charge for furniture rental and as such is reimbursable.  We do 
not think this charge should be treated differently merely because it 
was billed separately.

As to Mrs. Corpuz's claim for a security alarm fee and a police alarm 
permit, if the agency determines that it was reasonable for Mrs. 
Corpuz to incur these expenses in the interest of personal safety, 
these expense items may also be reimbursed as costs incurred incident 
to rental.

The FTR specifically provides that telephone installation charges may 
not be reimbursed when an employee rents an apartment while on 
temporary duty.  41 C.F.R.  301-7.14(a)(1).  Similarly, we have 
previously concluded that telephone installation charges, as claimed 
by Ms. Corpuz, are not allowable as TQSE.[7]  While the regulation 
does not strictly apply to TQSE, in light of our prior decisions, we 
believe that GSA and other agencies believe that the TDY rule is 
applicable to TQSE.  Until the regulation is changed, we believe the 
better rule is for telephone installation charges to be not 
reimbursable.

Finally, on the question of the lease termination fee, Mr. Fears 
contends that he had the choice of signing a 6-month lease or paying a 
much higher rent charge for month-to-month occupancy and that he chose 
the former to save money.  Since Mr. Fears assumed that he was going 
to be in temporary quarters for 4 months, he believed that it was less 
expensive to sign the 6-month lease, even though he knew that he might 
have to break it.  He argues that, under these circumstances, the 
lease termination fee of $111.20 should be deemed a cost incident to 
lodging.

We have generally considered forfeited rental deposits and re-letting 
fees paid on the premature settlement of unexpired leases not to be 
"subsistence expenses" and, therefore, not reimbursable as "actual 
subsistence expenses" incurred incident to occupancy of temporary 
quarters at a new duty station.  Patsy S. Ricard, 67 Comp. Gen. 285, 
290 (1988); David E. Nowak, supra; Alex Kale, 55 Comp. Gen. 779, 
782-83 (1976); Walter V. Smith, B-186435, Feb. 23, 1979.  On the other 
hand, in a decision involving a similar expense incurred on extended 
temporary duty (TDY), we held that a security deposit forfeited when 
an employee terminated a 6-month lease after approximately 4 months of 
occupancy could be reimbursed, even though the employee knew that his 
temporary duty assignment was due to end before the lease period would 
expire.  We allowed the expense because the security deposit was 
necessary to obtain a lodging rate substantially less than the daily 
rates for a hotel or motel room and the employee's lodging 
arrangements were reasonable and prudent and resulted in a cost 
advantage for the government.  Stuart Weisberg, B-192026, Oct. 11, 
1978.  Similarly, we have held that an employee who rented lodgings at 
a reduced 30-day rate could be reimbursed the entire cost, although he 
was on temporary duty only 22 days, since the 30-day rental resulted 
in a cost advantage compared to the higher cost for 22 days at a daily 
rate.  Willard R. Gillette, B-183341, May 13, 1975.

Although we have characterized forfeited rental deposits as "security 
deposits" rather than "subsistence expenses," the FTR defines 
allowable temporary quarters subsistence expenses to include fees 
incident to lodging.  41 C.F.R.  302-5.4(a).  We believe that the 
argument presented by the claimant here is correct:  a lease 
termination charge is an actual lodging expense, whether paid through 
forfeiture of a deposit or otherwise.  Agencies may reimburse such 
charges if they meet the standards applicable to any other lodging 
expenses incurred by employees authorized to occupy temporary 
quarters.

To summarize, the VA may reimburse Mr. Fears the final cleaning 
charge, apartment administrative fee, rental furniture delivery 
charge, and the lease termination expense, if otherwise appropriate.  
Similarly, Mrs. Corpuz may be reimbursed the apartment application 
fee, the security alarm fee, and the cost of the police alarm permit, 
provided the agency finds that such expenses were reasonably incurred 
in the interests of personal safety.  However, Mrs. Corpuz may not be 
reimbursed the telephone installation charge.  Finally, for both 
employees, the expenses are to be prorated over the period of 
temporary occupancy and such additional amounts when added to the 
daily amounts already paid may not exceed the maximum daily 
reimbursement authorized for transfers in the continental United 
States under section 302-5.4(c)(2)-(4) of the FTR.[8]  Because lease 
termination charges were previously held not to be reimbursable in 
Patsy S. Ricard, supra; David E. Nowak, supra; Alex Kale, supra; and 
Walter V. Smith, supra, those cases are overruled to the extent they 
are inconsistent with this decision.

/s/Seymour Efros
for Comptroller General
of the United States

1. Mr. Danny J. Ford, Chief, Fiscal Service, Carl T. Hayden Medical 
Center, Phoenix, Arizona (Ref. 644/04).

2. 41 C.F.R.  302, Part 5 (1993).

3. David E. Nowak, 65 Comp. Gen. 805 (1986); Guy V. Padgett, B-244721, 
Dec. 17, 1991.

4. Michael D. Duffy, B-168384, Feb. 19, 1975; Patrick T. Schluck, 
B-192723, Feb. 14, 1979.

5. 41 C.F.R.  301-7.14(a)(1) (1993).

6. Mike R. Suba, B-247711, Sept. 8, 1992, citing to Michael D. Duffy, 
footnote 4, supra.

7. Guy V. Padgett, B-244721, Dec. 17, 1991.

8. 41 C.F.R.  302-5.4(c)(2)-(4) (1993).